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The most efficient reforms failed to prevent poverty in Georgia

28.04.2009  |  15:37

5/3/9/2539.jpegAt the end of last week, David Bakradze, Speaker of Parliament, received a high award in witness of the fact that for the last five (!) years Georgia has been implementing the most efficient economical reforms in Europe. This conclusion was drawn by the International Finance Corporation (IFC) of the World Bank that has named Georgia to be a Number One reformer-country. Almost on the same day International Monetary Fund (IMF) listed Georgia among the 78 poorest world countries. So, what is the paradox of the Georgian economy? Why do conclusions drawn by the recognized international organizations differ so drastically?


International Monetary Fund (IMF) has listed Georgia among the 78 poorest countries in the world that have suffered most damage owing to financial crisis. It is true that Mikhail Saakashvili's numerous statements of the crisis having slightly touched Georgia on its way around the world, and the country still being attractive for business and investments have been proven wrong. On the other hand, another world-recognized organization, IFS, has named Georgia among the best reformers.

Meanwhile, IMF is promising Georgia, as one of the poorest countries, a double increase in soft credit. So far the limit volume has amounted to USD 750 mln, of which 400 mln has been already received by Georgia. Now the country has got the chance to borrow more.

So: is Georgia indeed a reformer, or is it one of the poorest countries in the world? And could the efficient reforms possibly bring its people to such poverty? The GeorgiaTimes correspondent has put those questions to the Georgian economic experts.

Georgi Khukhashvili believes that neither the IFC's statement, nor the IMF's conclusions are straight and true-to-life. "As to the reforms, it was only the nomination of simplifying the business documents completion procedure that was meant, - our interlocutor says. - We are going far behind on other matters". In our consultant's opinion, IMF's conclusions are not objective either. "Of course, the country is managing great economic difficulties, but on the whole, things are not as bad as the IMF's experts claim them to be, - Georgi Khukhashvili believes. - However, if the decline goes on we are going to hit the level of some African countries".

The expert points out that the soft credit promised by IMF is hardly going to contribute to the improvement of the overall economic situation: "It is possible to solve some short-terms tasks and minor social problems irregardless of the funds available. But if those funds are never going to be put forth, then, there is no way to manage the crisis. The situation required systemic reforms that no one is carrying out".

"The authorities are blaming the opposition for the economic decline, and the opposition, in its turn, says it is the authorities who have brought the country to that level of economic failure. So, why are the living conditions so poor in Georgia?" - I ask the expert. "There is a kind of political game running on, when there is no one to take the responsibility. Still, the prime responsibility is naturally placed upon the country government. By the way, - Georgi Khukhashvili says, - a well-known American edition has recently published the rating of the least successful politicians, which was headed by Saakashvili. The rating included two categories of appraisal: incompetence in the international politics and in the economic reforms". "Just like Russia did after the epoch of romanticism and the revival of democracy and business, Georgia is now moving backwards, to an epoch resembling a well-forgotten past", - the expert sums up.

According to Zurab Tkemaladze, leader of the Industry Is Going to Save Georgia movement, the contradiction between the conclusions of the World Bank and the Monetary Fund speaks of the fact that one of them is telling lies. In his opinion, the truth is traditionally somewhere in between. Of course, some reforms have been implemented, but Georgia can be in no way regarded as the best reformer. As to IMF, it is not right to reckon Georgia among the poorest countries. Besides, the expert goes on, the IMF's recommendations have always brought negative trends to the economy of Georgia. "We have been talking about it since 1994, as soon as we started to follow their recommendations, - our interlocutor pointed out. - Eventually, we have got a country with a completely ruined industry and agriculture". By the way, there is no country, where the Fund's recommendations turned out to be a success, Tkemaladze is getting steamed up. As to Georgia, the IMF's recommendations do not at all consider the specifics of the country. In the businessman's opinion, another soft credit is not going to save the Georgian economy. "Our foreign debt already exceeds 3 billion dollars. How are we going to pay it? - he is asking. - I would be in favour of such step should this money be spent on production development, but this tranche will again be used to patch the social holes, and in a year we will find ourselves in a much more pitiful situation than now".

So, what is needed to save the Georgian economy? First of all, political stability and a well-balanced foreign policy, which would help the country return to the Russian market, and, of course, a clearly defined economic program. As Tkemaladze believes, the current country leaders are outsiders on all those matters.


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